Morgan Stanley (MS.N) is raising $10
billion for a global property fund and plans to put $1.5
billion or more of that into China, shrugging off concern about
a property market downturn, a banking source said on Wednesday.
The Morgan Stanley Real Estate Fund VII Global, the latest
in a series of property investment funds, is expected to begin
investing worldwide before the end of this year, said the
source, who had direct knowledge of the fund.
It will invest at least 10 billion yuan ($1.46 billion) in
China over the next few years, taking a gradual approach while
focusing on the largest cities such as Shanghai, where the
price for a luxury downtown apartment can exceed $20 million,
said the source.
The retail portion of the fund-raising has been completed
with a minimum requirement of $1 million for individual
investors in Asia.
The institutional portion, which requires at least $10
million for each institutional investor, will be completed
soon, the source added.
"It should not be too difficult for Morgan Stanley to raise
funds from retail investors in Asia since, as you know, in
China alone the number of millionaires has been growing very
fast in recent years," the source said.
"As for the institutional portion, many of them are old
friends of Morgan Stanley," he said, referring to investors in
the Wall Street bank's last six global property funds.
The source declined to be identified because he was not
authorized to comment on the fund to the media. Morgan Stanley
declined to comment.
CHINA IN FOCUS
Some industry watchers, including Andy Xie, formerly Morgan
Stanley's Asia economist, have warned that bubbles may be
emerging in the property markets of some major cities such as
Shanghai, where many buyers are foreigners and investors rather
than long-term residents.
A property investment arm of Morgan Stanley has plans to
sell at least two high-end serviced apartment projects in
Shanghai, one of its earliest China property investments, for
several billion yuan, people familiar with the situation told
Reuters in June.
But Morgan Stanley and other foreign funds, including
Blackstone (BX.N) and Carlyle (CYL.UL), are also looking for
new investment opportunities in high-end residential and
commercial properties in China, according to industry sources.
Last month, sources with direct knowledge of the matter
told Reuters that Blackstone and others were vying to buy up to
four commercial buildings in Shanghai for as much as $1
billion.
That deal is still under discussion, however, industry
sources have said.
Some foreign funds have also begun shifting their focus to
second-tier Chinese cities, reflecting the large number of
investors and intensifying competition in the largest cities.
($1=6.832 Yuan)
(Editing by Edmund Klamann)
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